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Hello Sir ,
I cant find the growth rate in this example:Current Eps 30 cents
Payout ratio 40%
number of shares in issue 5m
Risk free rate 4%
Market premium 5%
Equity Beta 1.4Required: calculate value of firms equity using dividend growth model.
I cannot use the gordon growth approximation.. How do i find the growth rate?
Thank you in advance.
regards.
There is not enough information to be able to use the dividend growth model.
(But obviously the cost of equity can be calculated using CAPM).Why are you attempting questions for which you do not have an answer? You should be using a Revision Kit from one of the ACCA approved publishers – they have answers and explanations.
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